What is Enfranchisement? What is Enfranchisement? - - PDF document

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What is Enfranchisement? What is Enfranchisement?

• Refers to the process where participating leaseholders (tenants) acquire

the freehold title of the building/block and grounds.

• The relevant law that regulates this process is found in the Leasehold

Reform Housing and Urban Development Act 1993 (“the Act”) as amended.

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Preparation is key Preparation is key … …

Do I have the right? Do I have the right? Does the block qualify? Does the block qualify? 50% of tenants support? 50% of tenants support?

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‘ ‘Qualifying Tenant Qualifying Tenant’ ’

• Must hold your flat via a long lease (for more than 21 years)
• Flat owners who own more than 2 flats in the building may not count as

‘qualifying tenants’

• Must hold your flat via a long lease (for more than 21 years)
• Flat owners who own more than 2 flats in the building may not count as

‘qualifying tenants’

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Does the building qualify? Does the building qualify?

• The flats must all be in a self contained building
• No more than 25% of the building can be used for commercial space
• At least 2/3rds of all of the flats in the building must be ‘qualifying

tenancies’ (whether or not participating)

• The flats must all be in a self contained building
• No more than 25% of the building can be used for commercial space
• At least 2/3rds of all of the flats in the building must be ‘qualifying

tenancies’ (whether or not participating)

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Tenants Tenants’ ’ support support

• At least 50% of the leaseholders must participate, or 100% if the

building consists of 2 flats only.

• Participation Agreement –set out the terms of the purchase from the
• beginning. Not compulsory but highly recommended to ensure that al

participating tenants understand their place in the process and their financial involvement.

• At least 50% of the leaseholders must participate, or 100% if the

building consists of 2 flats only.

• Participation Agreement –set out the terms of the purchase from the
• beginning. Not compulsory but highly recommended to ensure that al

participating tenants understand their place in the process and their financial involvement.

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Arranging Funding Arranging Funding Instructing Valuer & Solicitor Instructing Valuer & Solicitor Nominee Purchaser Nominee Purchaser

Other considerations Other considerations

Participation Agreement Participation Agreement

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Procedure Procedure

Participating Tenants’ Notice Participating Tenants’ Notice

Landlord’s Counter Notice ADMITTING Enfranchisement Landlord’s Counter Notice ADMITTING Enfranchisement Landlord’s Counter Notice NOT ADMITTING Enfranchisement Landlord’s Counter Notice NOT ADMITTING Enfranchisement

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Tenant Tenant’ ’s Notice s Notice -

• Acceptance

Acceptance

Notice Notice 2 months 2 months Result! Conveyance of Freehold title Result! Conveyance of Freehold title

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Landlord Landlord’ ’s Counter Notice s Counter Notice

Landlord admits claim Landlord admits claim Agrees terms of claim notice Agrees terms of claim notice 2 months completion period 2 months completion period Additional 2 months period to apply to court Additional 2 months period to apply to court Disputes terms

• f claim notice

Disputes terms

• f claim notice

Apply to Land Tribunal within 2 months Apply to Land Tribunal within 2 months

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Landlord Landlord’ ’s Counter Notice s Counter Notice

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Method of valuation from Leaseholders and Freeholders viewpoint basically the existing term and reversion.

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Marriage value and effects on eventual figure applicable to unexpired terms of 80 years.

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Any factors to be taken into consideration in the valuation for example future development of the block/blocks. This includes possible extra storey, backland development, etc.

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Any planned maintenance by the management company that may have an effect on value.

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Assumption that all blocks have a 75% g.i.a residential content.

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Valuation will be on a best and worse case scenario dependent on yields.

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It would be helpful when the time comes to have Land Registry plans and copies of leases, etc.

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Graham Merrett g.merrett@stonier-hobbs.com 01225 463322 10 Fountain Buildings Lansdown Road Bath England BA1 5DU

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Presentation

Collective/ Leasehold Enfranchisement

20 October 2015

Stanton House Hotel Stanton Fitzwarren Swindon SN5 7SD